Monday, 15 May 2017

Uco Bank faces biz restrictions from RBI

Uco Bank faces biz restrictions(प्रतिबंध) from RBI

KOLKATA: City-based public sector lender Uco Bank is facing business restrictions from Reserve Bank of India (RBI) following mounting losses, continuous erosion(कटाव) of net worth and huge NPAs. The bank on Friday has informed stock exchanges that the apex bank, through a letter on May 5, has initiated "prompt corrective action" on some of its business activities over its high bad loans and negative return on assets. Uco Bank, in a filing to the stock exchanges, said the action "will not have any material impact(भौतिक प्रभाव) " on its performance, but did not give details of the corrective action.Basically, the restrictions will be on lending and branch expansion plans as the statel run lender reported losses for two successive fiscals amid severe stress on asset quality, an official of the bank said.

"There would be check on management compensation(नुकसान भरपाई) and directors' fees as well as the sector regulator has invoked prompt corrective action (PCA) for the bank, aiming to bring it back on recovery path," he added. It has become the second ender to face business restrictions after IDBI Bank following RBI's revision of its PCA framework last month.RBI has been on a mission to clean up the banking system which saw a surge in stressed assets.

Uco Bank's gross nonperforming loans stood at Rs 22,541 crore at the end of FY17, which was 17.1% of total advances. The NPA ratio of 8.94% was one of the poorest in the industry . It was 15.43% a year ago and 17.18% at the end of December last year.Under RBI rules, prompt corrective action is triggered if a bank's net NPL (Non-performing loan) ratio crosses 6%. The public sector lender has managed to bring down losses to Rs 588 crore in the fourth quarter of 2016-17 from Rs 1,715 crore in the same period of last financial year.The loss for 2016-17 also came down to Rs 1,851 crore from Rs 2,799 crore in the year-ago period.

Profit on sale of Investment increased to Rs 1,241crore as on March, 2017 against Rs 707 crore a year ago. Analysts say more lenders could come under central bank curbs as the regulator strives to clean up bad loans of $150 billion in the sector.

Definitions of compensation नुकसान भरपाई

noun

something, typically money, awarded to someone as a recompense for loss, injury, or suffering.